Components of Economic Growth

Self-Check Questions

What do the growth accounting studies conclude are the determinants of growth? Which is more important, the determinants or how they are combined?


Capital deepening and technology are important. What seems to be more important is how they are combined.

What policies can the government of a free-market economy implement to stimulate economic growth?


Government can contribute to economic growth by investing in human capital through the education system, building a strong physical infrastructure for transportation and commerce, increasing investment by lowering capital gains taxes, creating special economic zones that allow for reduced tariffs, and investing in research and development.

List the areas where government policy can help economic growth.


Public education, low investment taxes, funding for infrastructure projects, special economic zones